The Most Important Thing for Archer Aviation Investors to Watch in 2025

Key Points

• Archer Aviation is advancing toward commercial operations of its Midnight electric vertical takeoff and landing aircraft.

• The company is currently in the final phase of the certification process.

• Failure to achieve the requisite FAA certifications would be devastating for the upstart aviation company.

• 10 stocks we like better than Archer Aviation ›

For an upstart company like Archer Aviation (NYSE: ACHR) there's no shortage of hurdles that it must overcome. From ensuring that its capital needs are met to forging strategic relationships with manufacturing partners, there are numerous needs for the company to address.

But there's one issue that should remain at the forefront of investors' minds regarding the electric vertical takeoff and landing (eVTOL) company over the coming months -- one that undoubtedly is a priority on management's radar.

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This above all should be on investors' radars

Disrupting the aviation industry as Archer is aiming to do is no simple feat. Of the various issues investors are monitoring as the company approaches commercial operations in the wild blue yonder, Archer's progress toward achieving the requisite certifications from the Federal Aviation Administration (FAA) should be the most glaring thing on the radar.

Archer has high hopes for Midnight, its innovative eVTOL aircraft, but all of these lofty aspirations mean little if the FAA doesn't provide the necessary certifications.

Archer reported significant progress in the certification process in 2024, and the company has advanced even closer toward its goal in 2025. In February, for example, Archer received Part 141 certification from the FAA, allowing it to officially proceed with its pilot training program.

In Archer's first quarter 2025 financial presentation, management stated that the company is "largely focused on the fourth and final phase of the certification program and have received FAA approval for [about] 15% of the compliance verification documents."

Digging a little deeper into why the FAA certification means so much

Archer's ambitions are hardly bound to operating in the United States. In addition to to the operations it plans on commencing in New York and Los Angeles, Archer has signed agreements with Abu Dhabi Aviation and Ethiopian Airlines -- two companies that plan to purchase Midnight aircraft and provide service in their respective countries.

These plans are surely just the start for Archer's partnership with companies outside of the U.S. But, as it is with the FAA, Archer must secure the necessary permits to operate in the foreign markets where it plans to expand.

The company gained a lot more certainty with respect to operations in other countries in June, when the FAA and the Department of Transportation announced that the U.S. is spearheading a partnership with four other nations that would collaborate on streamlining the certification process and working toward the safe deployment of eVTOL aircraft. With the U.S. at the helm, the alliance includes the United Kingdom, Australia, Canada, and New Zealand.

Lauding the five-nation alliance, Archer CEO Adam Goldstein stated, "If you ever wanted to see a bat signal go up into the air and say Advanced Air Mobility is here, eVTOLS will be built, they will be certified and brought around the world, that's today."

Should Archer receive the final FAA certification, it should expedite its ability to commence operations in the nations that form the alliance, further indicating why the FAA certification is such a significant catalyst.

What's next on the radar for those planning to fly along with Archer stock

Archer has excelled at finding customers for its Midnight aircraft. From the air taxi network it's developing in New York with United Airlines to the deals it has inked with Abu Dhabi Aviation and Ethiopian Airlines, Archer is well positioned to soar when it receives clearance for takeoff.

But there's the rub. Archer hasn't received the necessary certification -- known as FAA Type Certification. It's critical, therefore, that investors monitor the company's progress in this regard since delays in the certification process would be a tremendous drag on the stock. Moreover, because there are no guarantees that Archer will receive the FAA Type Certification, prospective investors must recognize that an Archer investment carries with it a higher degree of risk, something they must be comfortable with before piloting Archer stock into their portfolios.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.